What is equity skimming fraud?Answer:
Equity skimming fraud can occur when your lender offers you to refinance your home loan on and on, without particularly good reason. This is a popular scenario of equity skimming, but it is easy to avoid once you can reason you are losing more and more equity with each refinance.
However, a more dangerous equity skimming fraud scenario endangers home owners experiencing financial difficulties.
Troubled Homeowners Are in Danger of Equity Skimming Fraud
If a borrower is in a hurry to sell their house to avoid foreclosure, or cover other bills, they are potentially vulnerable to a buyer who offers to buy the house and let the original owners stay on the premises paying rent.
The buyer is transferred the deed in exchange for a small down payment. The borrowers assume they no longer are responsible for the mortgage while they still are. In the end, the lender forecloses, and the original home owners have lost all their equity except for some down payment.
To avoid equity skimming fraud, do not accept small down payment for your house with a promise to save you from foreclosure and for more cash when the house is sold.
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